Auto industry, exports 'still healthy'

On the negative side, however, some experts, including a former finance minister, have warned that the euro crisis could last longer than expected.

Auto production is expected to reach 2.3 million units this year, including 1.3 million in domestic sales. Exports would be about 1 million cars as planned, said Ninnart Chaithirapinyo, vice chairman of Toyota Motor (Thailand).

Export figures for the first half do not indicate a slowdown, partly because of the rising Asian market, Ninnart told a seminar on Friday night.

Exports to Asia accounted for 31 per cent, with Europe representing only 7 per cent and the United States 12 per cent. Other major markets were the Middle East accounting for 26 per cent, and Oceania 20 per cent.

However Ninnart said the industry was worried by the rise of the baht.

“Every one-baht appreciation against the US dollar would result in a loss to Toyota of Bt1 billion,” he said.

Toyota was closely watching the situation in China and was giving priority to the safety of its personnel. 

“[However] we will not relocate our factory out of China and the protesting is expected to be short-lived,” he said.

When the Asean Economic Community is launched in 2015, China might dump cheap cars on to the Asean market, he warned.

The company continues to see Thailand as one of its production bases for exports. 

Ninnart said a weak point for Thailand was its inadequate research and development and poor coordination between government agencies.

The government’s tax incentive for first-car buyers had contributed to the domestic sales rise this year; but domestic consumption is expected to decline by 20 per cent in 2014 as tax measures come to an end, he said.

More support from government policy could lead to car production of 3 million units by 2017, he said.

Isara Wongrung, chairman of the Thai Hire Purchase Association, expected hire-

purchase loans would grow along with car production growth estimated to reach 60-70 per cent this year.

He forecast hire-purchase loans for new cars would be worth Bt600 billion, and loans for used cars about Bt250 billion this year.

Isara said that if flooding again spread into industrial areas, it could reduce car sales by 200,000 vehicles.

Meanwhile, MR Pridiyathorn Devakula, a former finance minister, is warning the euro zone 

crisis could last for a decade; while a US Federal Reserve injection of more liquidity into the US economy would not lead to it faster. Quantitative easing combined with lower interest rates of nearly zero per cent in the US would weaken the US dollar and make Asian currencies – in particularly the Thai baht, Malaysian ringgit and Singapore dollar – stronger, he said.

“The issue now is whether it would adversely affect Asia due to a rapid rise in currencies, leading to a bigger question whether these countries will have to put in place measures to prevent huge capital inflows,” he said.

MR Pridiyathorn said the islands dispute between China and Japan might negatively affect Japanese car manufacturing there, meaning Japanese investors might consider expanding their production base in Thailand.

Supavud Saicheua, managing director of Merrill Lynch Phatra Securities, said the weaker dollar and low interest rates in the US would continue until mid-2015.